Tokyo’s Nikkei average opened down 1.7 percent as a
slew of stocks passed the deadline for buyers to gain rights to
first-half dividends.

The falls follow an easing in global stocks and a drop in
the euro to a near two-week low of $1.2886 on Tuesday.
The CBOE Volatility index, a gauge of expected volatility
in the Standard & Poor’s 500 index, rose to its highest
in about two weeks.

With this week marking the month-end, the end of
July-September quarter, and in Japan, the fiscal first-half,
flows were likely to be driven by book-closing related
adjustments.

Kenichi Hirano, operating officer at Tachibana Securities in
Tokyo, said some investors could buy for window-dressing
purposes ahead of the fiscal half-end.

Others noted that a further drop in Japanese stocks could
fuel speculation about yen-weakening intervention by Japanese
authorities to help shore up first-half book closing.

Such wariness could limit the dollar’s downside against the
yen, said Yuji Saito, director of foreign exchange at Credit
Agricole in Tokyo.

“Selling and buying forces both lack strong momentum, but
the market is biased towards selling, with euro capped by its
own problems and the dollar also top-heavy against the yen,” he
said.

He said the euro could slip briefly below 100 yen
while the dollar could approach 77.50 yen. But heavy bids placed
at 77.50 yen may spur a blip above 78 yen, he said.

The yen traded at 77.72 yen, near a one-week high of
77.655 hit on Tuesday, and was at 100.26 against the
euro. The euro steadied at $1.2900, but stayed pressured.

Protests flared up in Spain on Tuesday ahead of the planned
announcement of a new round of unpopular austerity measures for
the 2013 budget on Thursday. Spain will also likely set a fresh
timetable for economic reforms later this week.

Markets are closely watching Madrid’s ability to control its
finances, with ballooning regional debts crippling the
government’s refinancing efforts.

But Prime Minister Mariano Rajoy is holding back from
seeking a sovereign bailout, which would set the stage for the
European Central Bank to start buying high-yielding Spanish
bonds to ease the country’s borrowing strains.

U.S. equities fell on Tuesday, hurt in part by comments from
prominent asset manager BlackRock Inc which said it
believed this year’s rally in the U.S. stock market has run its
course.

The fall came despite the Conference Board, an industry
group, saying U.S. consumer confidence jumped to its highest
level in seven months in September,

Market rallies inspired by monetary easing measures taken
this month by the U.S Federal Reserve and the Bank of Japan, as
well as the ECB’s bond-buying plan, have quickly been overtaken
by concerns about deteriorating world economies.

China’s central bank said on Tuesday, after its
third-quarter monetary policy meeting, that it will “fine tune”
policy to cushion the economy against global risks while closely
watching the possible impact from recent policy loosening in the
United States and Europe.

China cut interest rates twice in June and July and lowered
banks’ reserve requirement ratio (RRR) three times since late
2011, but has refrained from cutting interest rates or RRR since
July.

U.S. crude fell 0.6 percent to $90.87 a barrel while
Brent also fell 0.6 percent to $109.82. Brent crude rose
on Tuesday in choppy trade as tensions over Iran reinforced the
geopolitical fear premium but growth concerns pressured U.S. oil
prices.

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